National Standard 2 An Independent Board that Reflects the Community

A community foundation has an independent governing body that ensures the community foundation reflects and serves the breadth and diversity of the community.

Key Elements

2.1 Are all board officer positions and the minimum number of board seats filled according to the foundation's bylaws and state law?

2.2 Before selecting board nominees, did the board discuss board composition and diversity in relation to the community’s composition and diversity? Please provide governance committee or board minutes that reflect a discussion about diversity.

3

Foundation Control over Component Funds

A community foundation’s governing body retains variance power by which it may modify any restriction or condition on the distribution of assets, if circumstances warrant.

National Standard 3 Foundation Control over Component Funds

A community foundation’s governing body retains variance power to modify any restriction or condition on the distribution of assets, if circumstances warrant. Further, with respect to assets held in trust, the governing body must have the power to replace any participating trustee for breach of fiduciary duty.

Key Elements

3.1 Does the foundation have a process for making a material change to a fund agreement and determining when the board needs to vote on those changes?

3.2 If the community foundation has assets held in trust, does the board understand that they have sole and independent power to:

Replace any participating trustee, custodian, or agent for breach of fiduciary duty

Replace any participating trustee, custodian, or agent for failure to produce a reasonable return of net income over a reasonable period of time?

3.3 Does that policy outline a process to ensure that a fund remains active with regard to grant activity, unless otherwise specified by the donor and is approved by the board or the staff to which this responsibility is delegated. Does the applicant ensure this policy is shared with the donor and is made available to the public?

Note: For new donor advised funds, this fund activity requirement must be acknowledged by the donor at the time the fund is established. For existing donor advised funds, a notification via the method of your choice (i.e. email, phone, etc.) may be sent to all current donor advisors.

4

Advance the Foundation's Mission, Strategy, and Policies

A community foundation’s governing body is responsible for the mission, strategic direction, and policies of a foundation.

Note: The reviewer checks whether the budget documents reflect actual revenues and expenditures compared to the budget to date.

5.6 Does the board receive budget reports on a regular basis that include the foundation’s activities and analysis of budgetary variance?

5.7 Did the foundation become aware of any significant diversions of the foundation's assets in the past two years?

Note: A significant diversion is one required to be reported on Form 990, Part VI, Q.5.).

5.8 Has the foundation been notified that it is under investigation by a federal or state regulator in the past two years (including an IRS Audit)?

5.9 Does the community foundation have an annual performance review process for the CEO?

5.10 Is the CEO’s compensation set by the board based on the performance review and a review of a relevant salary survey?

6

A Board that Monitors Policies and Grants

A community foundation's governing body approves and monitors policies regulating the ethical operations of the community foundation, ensures that the community foundation meets all legal requirements, and approves all grants.

National Standard 6 A Board that Approves and Monitors Policies and Grants

A community foundation's governing body approves and monitors policies regulating the ethical operations of the community foundation, ensures that the community foundation meets all legal requirements, and approves all grants.

Key Elements

6.1 Does each board member receive a board handbook that includes the following?

Job descriptions

Board level committee descriptions

Current copies of governing documents

6.2 Does the foundation retain board minutes in accordance with its document retention policy?

6.3 Does the board approve new or revised policy or governing documentation as required by internal policies?

6.4 Does the board receive reports from each board level committee at least once per year

6.5 Do the board minutes reflect board approval of all grants required by internal policies?

Note: This may include ratifying staff- related approvals for grants.

6.6 Does the board follow the applicable state laws when making decisions by teleconference or written consent?

Note: Many states require unanimous written consent via email. This information is usually found in state corporations law and regulations.

6.7 How many times did the board meet last year?

7

A Board that is Independent

A community foundation's governing body is not controlled by any other nonprofit foundation.

National Standard 7 A Board that is Independent

A community foundation's governing body is not controlled by any other nonprofit foundation; by any single family, business, or governmental entity; or by any narrow group within the community it serves.

Key Elements

7.1 Do the foundation bylaws state that the board is the ultimate governing body?

7.2 To meet this standard, applicants must provide written job descriptions or scope of responsibilities for board members. The peer reviewer is looking for descriptions that are more specific than generic fiduciary and officer duties.

7.3 Is the board chair independent of the executive director and foundation management?

7.4 Are all board members, employees, volunteers, staff, and consultants annually required to review and sign a written acknowledgement of the conflicts of interest policy, or as required by law?

7.5 Provide one example of board or board level committee minutes that demonstrates that the community foundation has reviewed a conflict of interest. If the minutes do not include a narrative of how the issue was worked through and resolved, please include a brief narrative with that information in addition to the board minutes.

8

Board and CEO Compensation

A community foundation's governing body oversees a clearly articulated process for board governance and serves without compensation (exclusive of the chief executive officer).

National Standard 8 Board and CEO Compensation

A community foundation's governing body oversees a clearly articulated process for board governance and serves without compensation (exclusive of the CEO).

Key Elements

8.1 Do any community foundation board members receive compensation from the community foundation for their service as a board member exclusive of the CEO? The reviewer will cross check this information against your Form 990.

8.2 Is your CEO’s compensation recorded on the Form 990? The CEO’s compensation must be listed regardless of what that salary is. Here is the IRS citation for more information.

9

Oversight and Control of Geographic Affiliates

A community foundation's governing body maintains oversight and control over geographic affiliates.

National Standard 9 A Board with Oversight and Control of Geographic Affiliates

A community foundation's governing body maintains oversight and control over geographic affiliates. A geographic affiliate is a component fund (or collection of component funds), established within or by the community foundation, serving a defined geographic region and under a common advisory group.

Expanded Definition of a Geographic Affiliate (or similarly named body)

National Standards defines a geographic affiliate (or similarly named body) as a component fund (or collection of component funds) established within or by the community foundation that serves a defined geographic region and is under a common advisory group. These affiliates operate under the legal control of the applicant community foundation. For example, a fund that serves a particular county in your service area with its own advisory board but whose activities are under the control of the applicant community foundation would fall under this definition. In contrast, a women's fund serving your entire service area would not meet this definition. Separately incorporated charities, including supporting foundations, are also not covered by this definition.

Key Elements

9.1 Does the community foundation host geographic affiliates as defined in this section?

9.2 Does the chief executive officer or his/her designee of the community foundation explain the following information (verbally and in writing) to the advisory committee chair of the affiliate fund?

Affiliates are organized as geographic component funds of the community foundation

As a component fund of the community foundation, the geographic affiliate is not independent

The host community foundation has overriding governance authority

9.3 Do any representative agreements or operation policies contradict the host community foundation’s control and oversight of the geographic affiliate?

Resource Development

10

A Board and Staff Actively Developing Broad Support

A community foundation has, or is actively working to develop, broad support.

National Standard 10 A Board and Staff Actively Developing Broad Support

A community foundation has, or is actively working to develop, broad support in the form of contributions from many separate, unrelated donors with diverse charitable interests and accepts and administers diverse gift and fund types to meet the varied philanthropic objectives of donors and the needs of the community it serves.

Key Elements

10.1 Does the board have a plan to develop long-term support from many separate unrelated donors? This usually includes development of unrestricted assets that are under the discretion of the board.

Note: The asset development plan may be a component of strategic plan.

10.2 Does the board annually discuss and review the asset development plan?

10.3 Has the foundation registered with the appropriate state and local authorities in each state in which the foundation solicits contributions? More information can be found here: NASCO, Unified Registration Statement

11

The Board Secures Discretionary Resources

A community foundation has a long-term goal of securing discretionary resources to address the changing needs of the community it serves.

National Standard 11 The Board Secures Discretionary Resources

A community foundation has a long-term goal of securing discretionary resources to address the changing needs of the community it serves.

Key Elements

11.1 Does the asset development plan include a long-term strategy to raise unrestricted dollars that can be used for operations and discretionary grant making?

12

The Board Demonstrates Legal and Fiduciary Control

A community foundation's governing body has legal and fiduciary control over all contributions received, adopts appropriate gift and fund acceptance policies, and makes these policies available upon request.

National Standard 12 The Board Demonstrates Legal and Fiduciary Control

A community foundation's governing body has legal and fiduciary control over all contributions received, adopts appropriate gift and fund acceptance policies, and makes these policies available upon request.

Key Elements

12.1 Does your community foundation make gift and fund acceptance policies available upon request?

Stewardship & Accountability

13

Fund Management and Financial Records

A community foundation is a steward of charitable funds, which invests and prudently manages funds and maintains accurate financial records.

National Standard 14 The Board is Accountable and Transparent about Programs and Finances

A community foundation is accountable to the community it serves and demonstrates this accountability by regularly disseminating information on its programs, finances, investments, and spending policies.

Sample Public Disclosure Policy – The Foundation will make available for public inspection the last three years of its tax documents, including Internal Revenue Service Forms 990 and 990-T (if applicable), any audit, and its tax exempt letter. If the request for any of these documents is made in person, the requested documents will be provided on the day of the request if possible. If the request is in writing (including email), copies will be provided within 30 days of the request. The requestor may be charged a reasonable fee for the cost of copying, plus storage. Questions concerning documents should be addressed to either the Executive Director or Board Chair of the Foundation.

Key Elements

14.1 Does the foundation post its most recent Form 990 to its website or to Guidestar?

14.2 Does the foundation post its last three IRS Form 990-Ts to its website or to GuideStar, or have a public disclosure statement that they will posted as they are filed?

14.3 Does the foundation make public an annual summary of its activities and financial status (this could be pages of the foundation’s website, an annual report, etc.)?

For example: Pages of the foundation’s website, an annual report, etc.

15

The Foundation Maintains Fund Records

A community foundation maintains a written record of the terms and conditions of each component fund and all applicable records must reference the variance power.

National Standard 16 Board and Staff Honors Donor Intent and the Law

A community foundation honors the charitable intentions of its donors, consistent with community needs, and maintains a balance between donor involvement and governing board control, in accordance with all applicable laws and regulations.

Key Elements

16.1 Does the foundation keep records that are used to provide the staff and board with an understanding of the donor’s intent for each executed fund agreement or gift instrument? These can be notes or addendums in each donor file.

16.2 Please select all of the ways the community foundation demonstrates understanding of donor intent:

Periodically reviews gift agreements with living donors to determine if changes are necessary, such as succession planning for donor advised funds and clarifying the purpose of a fund

Keeps records of planning conversations and donor conversations

Maintains internal documents showing discussion of donor intent when making grants from the fund, such as board minutes or the materials provided to the board for grant making ratification/voting

Other, please explain

16.3 If the community foundation engages with third-party gift planners or fundraisers does your foundation take the following actions?

Check that the third-party participant(s) are registered with the appropriate state authorities,

Properly report these fundraising expenses on the foundation’s Form 990, and

Disclose to donors information regarding the third-party relationship such as the name of the third-party and the financial benefit provided to the third-party.

16.4 If you allow your donors to initiate fundraising activities, do you share your donor-initiated fundraising guidelines or policy with them?

16.5Does the community foundation award all scholarships in compliance with the following?

Board approves all members of the committee by name, and the staff checks to make sure the donor, donor advisor, or related parties do not control the selection process

Ensures the donor, the parties related to the donor, or donor advisors to not directly or indirectly control the committee.

All grants are awarded on an objective and nondiscriminatory basis using a procedure that has been approved in advance by the board of directors of the sponsoring organization and that has been designed to ensure that all such grants meet the regulatory requirements for scholarship programs

National Standard 17 The Board Has and Makes Public the Annual Audit

A community foundation has an annual audit (or financial review, when assets total less than $5 million) performed by an independent public accountant, reviewed and accepted by the governing body, and made available to the public upon request.

Key Elements

17.1 Does the community foundation have an audit committee or a committee that serves that purpose?

17.2 Did the board review and accept the auditor’s annual management letter and audit? If under $5 million, did the board review and approve an independent CPA’s review?

17.3 Is the foundation's audit available to the public (i.e. via the website or the office)?

Grantmaking

National Standard 18 The Board Oversees Diverse Grantmaking

A community foundation operates a broad grants program to multiple grantees that is not limited by mission to a single focus or cause or exclusively to the interests of a particular constituency, and widely disseminates grant guidelines to ensure the fullest possible participation from the community it serves.

Key Elements

18.1 Does the foundation provide guidelines on how to access or apply for each of the foundation’s competitive grant opportunities?

18.2 Provide evidence that the foundation provides lists of past grantees that demonstrate the diversity of the foundation’s grant program.

National Standard 20 The Community Foundation Oversees Grantmaking Due Diligence

A community foundation performs due diligence to ensure that grants will be used for charitable purposes and assesses the impact of its grantmaking.

Key Elements

20.1 Provide a process, flowchart, or checklist for determining which grants require exercise of expenditure responsibility. These grants include donor advised funds and fiscal sponsorship arrangements. If this is detailed in the foundation's due diligence policy, please attach that as evidence. If it is a separate document, please attach the separate document. The reviewer is looking for a level of specificity that includes all of the necessary steps for expenditure responsibility, specifically:

Conducting a pre-grant inquiry - including a reasonable investigation of the grantee - to ensure that the proposed activity is charitable and that the grantee is able to perform the proposed activity

Executing a written agreement with the grantee that specifies the charitable purposes of the grant, includes provisions that prohibit use of the funds for lobbying activities, and requires the grantee to return any funds not used for the designated purposes

Requiring the grantee to maintain the grant funds in a separate fund so that charitable funds are segregated from non-charitable funds

Requiring the grantee to provide regular reports on the use of the funds and the charitable activity supported by the grant

Keeping documentation about the grant with a brief description of the grant, amount, charitable purpose, and current status of the grant (Note the 990PF requires this information, however, the current and revised Form 990 for public charities do not have instructions indicating that such information should be reported on the Form, so the application of this requirement to community foundations with donor-advised funds is unclear at this time)

Hints: Common responses that are not compliant:

We only make grants to 501(c)(3)s–This language is insufficient for a policy. Both private foundations and supporting foundations are classified as 501(c)(3) foundations, and grants to these foundations may require expenditure responsibility.

We do not make grants that require expenditure responsibility – This language is insufficient for a policy. If the foundation does not make expenditure responsibility grants, your policy should state that you only make grants to 501(c)(3) public charities classified under sections 509(a)(1) and 509(a)(2) and identify the process used by the foundation to verify a grantee’s status as one of those types.

Determination Letters–Reliance on a foundation’s determination letter is insufficient as it will not necessarily indicate whether a foundation is classified under 509(a)(1) and 509(a)(2). For example, the policy should indicate whether you use GuideStar Charity Check, the IRS Select Check, or the Exempt Foundations BMF tool to verify a potential grantee’s tax status as 509(a)(1) or 509(a)(2).

For resources related to this standard, refer to 'NS 20' designated content in the 'Shared Documents' tab under the 'Documents' section on the assessment dashboard.

Donor Relations

21

Donor Education and Engagement

A community foundation educates and engages donors in identifying and addressing community issues and grantmaking opportunities.

A community foundation promptly and accurately acknowledges gifts and provides fund statements, at least annually, to donors who wish to receive them.

Key Elements

22.1 Do all donors, including online donors, who make a gift of more than $250 receive a gift acknowledgement that complies with the IRS guidelines for a gift receipt, including:

Name of the organization

Amount of the cash contribution

Description but not the value of non-cash contribution

Statement that the community foundation did not provide goods or services in whole or in partial consideration for any contributions to the organization or a good faith estimate of the value of goods and services, if any, that an organization provided in return for the contribution

For donors to advised funds, the specific statement that the foundation has exclusive legal control over the contributed assets.

Note: PayPal does not offer this type of receipt and does not allow editing of its receipts, so additional information is required for a gift receipt from the PayPal site and possibly from other online vendors.

22.2 Does the community foundation provide all interested fund holders with fund statements at least annually or upon request? A fund statement that is available through an online portal satisfies this requirement.

23

Privacy & Confidentiality

A community foundation keeps all private information obtained with respect to donors and prospective donors confidential to the fullest extent possible.

National Standard 23 Privacy & Confidentiality

A community foundation keeps all private information obtained with respect to donors and prospective donors confidential to the fullest extent possible. If a community foundation uses an online giving portal, it must ensure that it protects donor data, honors donor intent, and discloses any transaction fees.

Key Elements

23.1 Do all employees, board members, staff and committee members receive the foundation's privacy/confidentiality policy and sign off that they understand and will comply with the policy?

National Standard 24 The Board Displays Community Leadership

A community foundation identifies and addresses community issues and opportunities. It strives to serve in leadership roles, including convening, and to assess the impact of its community leadership.

Key Elements

In 2013, CFLeads defines community foundation leadership as– “The community foundation is a partner that creates a better future for all by pursuing the community’s greatest opportunities and addressing the most critical challenges, inclusively uniting people, institutions and resources from throughout the community, and producing significant, widely shared and lasting results.”

24.1 Provide a narrative and specific sections of the foundation's annual report, board minutes, indicators reports, or similar information that speak to how the community foundation identifies and responds to community issues. This example could be a grant or another activity that shows how the foundation listens and responds to the community.

Hints

The reviewers are not looking for one way that all community foundations do this work. They are looking for information that demonstrates the community foundation is aware of its community needs and it focuses resources to address those issues.

Your submission should provide at least one example of your community foundation’s community leadership in the last two years.

Non-funding examples include participating in or leading convenings on specific topics that are important to the community, having a process for assessment of grantmaking and how that influences future grant cycles, and recording evidence of how the community foundation serves the breadth and diversity of the community.

Funding examples that address community issues can range from creating an initiative; being the fiscal sponsor of a large project; focusing some discretionary or pooled funds into one project, program, or area that the community deems important (e.g. education, health, environment, emergency preparedness, emergency response, neighborhood planning, etc.); and structuring a grant program to include broad community input or voting on projects.

Examples should be from the last two years.

For assistance with defining and explaining community leadership, here are some resources:

If your community foundation does not believe it meets this Standard, please speak with the Executive Director of National Standards for clarification or provide a narrative explaining how your community foundation meets the definition of a community foundation described in National Standard 1, but does not engage in these activities.

25

Social Media and Communications

The community foundation communicates openly and transparently on a regular basis.

National Standard 25 The Board Oversees Social Media and Communications

The community foundation communicates openly and transparently on a regular basis. If social media is used by employees or in foundation communications, the community foundation develops a social media policy.

Key Elements

25.1 Does the community foundation share foundation news and communications regularly with the broad community regularly? Check all that apply:

Press Releases

Annual Report

Website Updates

Social Media Updates (Facebook, Twitter, etc.)

None of the Above

Other, please specify

26

Advocacy and Lobbying Activities

When involved in advocacy or lobbying activities, the community foundation ensures it is in compliance with applicable federal and state regulations.

National Standard 26 The Board Oversees Advocacy and Lobbying Activities

When involved in advocacy or lobbying activities, the community foundation ensures it is in compliance with applicable federal and state regulations.

The reviewer will look for information about how the community foundation’s staff and board discuss advocacy or lobbying activities or grantmaking that includes advocacy or lobbying efforts.

Applicants should check the foundation's Form 990, Part IV and Schedule C to make sure any lobbying activities have been captured. The peer reviewer may cross-check the applicant response with the foundation's Form 990.

Remember that responding "No Activity" and submitting your application is equivalent to the board and CEO attesting that advocacy and lobbying are not conducted by the community foundation and that the community foundation does not make grants to support lobbying by others.